50p: Why musicians must dump the labels

Fabled record label boss Rick Rubin reckons subscription-based services will form the future of the music industry - but do artists need that kind of business?
Rubin - who launched Def…

By
Jonny Evans
| 03 Sep 07

Fabled record label boss Rick Rubin reckons subscription-based services will form the future of the music industry - but do artists need that kind of business?

Rubin - who launched Def Jam Recordings and has produced host of the music industry's biggest acts - is now head of Sony's famed imprint, Columbia Records

Interviewed by the New York Times, he admits to the misery affecting the music industry and makes a plea for a joint approach to create a viable future business model.

"The music business, as a whole, has lost its faith in content," David Geffen told the New York Times as reported in the Rubin profile "Only ten years ago, companies wanted to make records, presumably good records, and see if they sold. But panic has set in, and now it's no longer about making music, it's all about how to sell music."

Rubin admits that his research has confirmed that younger music fans no longer listen to music, mostly take it for free from file-sharing networks and buy music from iTunes. They're also abandoning MySpace and use word of mouth to find out about new artists.

Rubin believes the future of the industry is a subscription model, much like paid cable on a television set - and thinks such models would "make the iPod obsolete".

"If music is easily available at a price of five or six dollars a month, then nobody will steal it."

But there's a huge flaw in the label's plan to oust the iPod and iTunes - and that's the artists.

Artists get paid pennies for iTunes downloads. However, royalty rates for subscription-based services are even lower, meaning artist's could see far less money for their art.

In any case, at this stage subscription-based music services don't seem to appeal to music fans, primarily because music purchases are casual and ad-hoc, while subscription demands an ongoing commitment. And such services leave music fans with no ownership of the music they love.

UK musician and Radio 6 DJ, Tom Robinson, doesn't see much point to the present music industry system - he's offering his albums to music fans for free download.

He notes: "iTunes downloads cost 79p per track. Writer/publisher get 6p, Performer 6-8p, Visa/Mastercard 7p, Apple 12p, and record company almost 50p. Sod that. Help yourself to my songs and share them with your friends."

As Robinson's figures reveal, with the label seizing 50p from each download, that leaves scant margin for the artists these labels claim to support.

Given that an artist needs press attention, marketing and promotional support, distribution and cash for recording costs, there's an opportunity for a new kind of business that takes less cash, exercises looser controls, and still helps an artist reach their word of mouth-based audience.

As the money artists raise through subscription-based services is even more insignificant, the label's notion that subscription is the future of music is flawed.

Musicians, not labels, are the future of music.

Apple could address this by offering artists a direct distribution deal, in which they sidetrack the labels completely.

More well-known artists reaching the end of their contractual terms with record labels would then have the option of selling their music to fans directly through iTunes.

And would be 50p per download better off.

The question isn't whether iTunes should dominate the music business, but whether the music industry as it is is worth 50p per song sale in terms of what it offers artists.

In an environment of shrinking music sales, rising piracy, and games of corporate hardball as major labels attempt to force higher prices on consumers, many artists may well consider that it's not worth working with labels any more.

The question for the future of the music industry isn't about it transforming its business model, but about how music fans can create active word of mouth networks to publicise new bands.

And providing artists with easily accessible distribution networks that replace those presently provided by labels.